Should the government invest in alternative energy?

This is a rush transcript from "Special Report," May 16, 2012. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

JAMES NELSON, SOLAR 3D PRESIDENT: Supporting research is an important role of government but the loan guarantee program is a wasteful mistake because it doesn't work. Having spent most of my career developing strategy for companies large and small, I have learned one important thing, and that is, that it is economics not government policy that drives behavior.

GREGORY KATS, CAPITAL-E PRESIDENT: The clear financial success the employment and security benefits demonstrated by this program, demonstrates that the DOE should ramp up its loan guarantee efforts and provide loan guarantee support for roughly another $30 to $40 billion of U.S. clean energy projects and companies.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: Well, the current environment doesn't seem like that is going to be possible with Solyndra fresh in their minds. House Republicans holding a hearing up on Capitol Hill today about green energy. How much the government should invest in it.

We're back with the panel. Charles, there was testimony obviously on both sides. But the point Republicans were making was the promise as we talked about in the previous panel of President Obama, the one million jobs created hasn't come close.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Look, it's pie in the sky because I think Obama misunderstands the role of government in new technology. Yes, the government ought to invest in research, as it does with NIH, for example. Because for a private company to go into new research or basic research won't make sense. It's not going to pay off in a way they're going to be able to be solvent.

But the government has that role. But the role is not to subsidize infant industries like these which are clearly not economical and are miles away from being economical. There will be technological advances in the future. And with solar or wind or others will be economic and competitive.

But they are not nearly selling. When Obama says he wants to make it competitive, it's not that he's going to make the alternate energies cheaper, is that he wants to tax and restrict -- and regulate the traditional energies to a point where it becomes so expensive that it matches the uneconomical clean energies in expense and then it becomes even.

But that's the wrong way to go about it because it bleeds the economy, it raises our energy prices and power expenses, and it undermines the entire economy. I think they're going about it entirely the wrong way.

BAIER: Juan, sometimes these hearings can just be for the lawmakers to show that they're tough on these guys. At one point in this hearing, the CEO of a company called First Solar was questioned because -- and really chastised because he and his board -- members of his board -- sold some 700,000 shares of stock three days after getting taxpayer subsidies. That kind of thing really sets off alarm bells.

JUAN WILLIAMS, COLUMNIST, THE HILL: It should. I mean clearly it looks like the sucker in the deal is the taxpayer. And it makes everybody nervous. And also you heard in the hearing where people said, look, just straight out, right, it doesn't seem to make sense. Now on the other hand, I think the other side of this picture is that there has to be a role for government in alternative energy.

I mean you look at Germany, you look at China, you look at Brazil, they're all investing in alternative energy. The question is how do you go about it in such a way that you don't have a backlash of failure that comes from a Solyndra type deal, which is right now souring the American public on the idea of making what I think is a legitimate and necessary investment in alternative energy for the future. Especially given -- everyone I think would agree that we are overly dependent on Middle Eastern oil.

BAIER: Steve?

STEVE HAYES, SENIOR WRITER, WEEKLY STANDARD: Well, many European countries are in fact cutting back their investments in alternative energies because they've proven so ineffective and cost so much money. But this is the level of absurdity that we're talking about with respect to green energy. $90 billion of taxpayer money went into green energy as a part of the stimulus package to create these illusory million jobs as you suggest.

At the same time we are awaiting an announcement tomorrow on the outcome of an investigation by the U.S. Department of Commerce into the government of China, for what? For subsidizing green energy. So at the exact same time we're subsidizing the heck out of green energy we're going after China because they're subsidizing green energy. I mean it's like a folly of the absurd.

BAIER: Here in the U.S.?

HAYES: Here in -- well, no, they're subsidizing it over there and we're complaining that it's unfair practices. So there was an investigation launched in November by the Department of Commerce that has gone through several steps now. We're waiting an announcement on the final outcome of this which may in fact lead to tariffs. The administration is so dedicated to protecting the -- the green energy industry.

BAIER: How big an issue is this in the fall?

KRAUTHAMMER: Well I think it's an adjunct to the issue or it's a part of the major issue. Obama's answer to everything -- expand the government, spend a lot of money, borrow a lot of money under the word "invest." So I think it fits in that. But I think the biggest boondoggle of all was started actually not in the Obama years but before that, which is ethanol.

Even Al Gore admits that it does nothing in respect to climate. It consumes as much energy as it saves. It's a complete loss. And what happens? We're locked into it, huge subsidies, it's a complete waste of money for the taxpayer and the country.

BAIER: That is it for the panel. But stay tuned. And someone should have told the next anchor that, too.

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